Food & Beverage

General Mills has high hopes for Tiny Toast

General Mills creates new cereal for first time in 15 years

Faced with shrinking cereal sales, General Mills is doing something it hasn't done for 15 years — launch a new cereal brand.

"It looks like a big bet on a small idea," Tammy Katz, CEO of Katz Marketing Solutions in Ohio, told CNBC.

General Mills announced the new cereal this week.

Tiny Toast, a toast-shaped cereal with bits of blueberries and strawberries sprinkled on top, is the company's attempt to revitalize an industry that has declined an average of 3 percent per year for the last three years, according to Nielsen data.

In 2012, Americans bought $9.6 billion worth of cereal, however sales have dropped to $8.75 billion since.

Consumers' focus is currently directed at mobile eating and high protein and high fiber diets, according to Katz. Americans have been swapping their cereal in favor of protein bars and breakfast sandwiches they can eat on the go.

She suggested Tiny Toast, which is free of artificial colors and flavors like much of the company's cereal line, misses the mark on what customers want.

"It's really surprising because General Mills is usually fantastic on innovation — they do all their homework on consumers — and identifying consumer needs, and this isn't one of them," she said.

The lack of innovation may make it difficult for the new brand to compete in a crowded category.

Tiny Toast is reminiscent in appearance of Cinnamon French Toast Crunch, but the brand brings a fruity taste to General Mills' line up.

Ken Harris, managing partner at Cadent Consulting Group, said the brand, which currently has two flavors, could easily be adapted to suit other palates and could pave the way as a new model for General Mills' current selection of cereals.

"If this really takes off, if consumers really fall in love with the product, they [General Mills] are going to look like geniuses," Harris told CNBC.

"If [General Mills nails] this thing then Kellogg's and Post and everyone else will not be far behind," he said.

But innovating in the cereal category can be hit or miss. General Mills' last big success with a new cereal brand was Reese's Puffs, which was launched in 1994. However, Harmony, which was aimed largely at women, disappeared only two years after its 2001 launch.